The management at Boymelgreen Capital has been given a breather. Yesterday the holders of series B1 and B3 bonds convened and agreed to forgo their demand for immediate repayment of NIS 400 million, at this stage at least.
Shaya Could Lose Control of Holding Company
The management at Boymelgreen Capital has been given a breather. Yesterday the holders of series B1 and B3 bonds convened and agreed to forgo their demand for immediate repayment of NIS 400 million, at this stage at least.
Company controlling shareholder Shaya Boymelgreen was present at the assembly, as was the company’s management. The bondholders have agreed to try to reach a new arrangement with the company.
The biggest institutional holders of Boymelgreen Capital bonds are Psagot, Analyst and Menorah.
The arrangement, if one ensues, is likely to dilute Boymelgreen’s personal holding in the company to the point of losing the controlling interest. At present he owns 90% of its shares.
But converting debt into equity would, given the numbers involved, leave the institutional investors with the controlling stake – unless Boymelgreen Capital manages to repay them using money from selling assets, specifically the Assouta hospital complex in north Tel Aviv and the Sharon-Moriah hotel chain.
Beyond the debt to these bondholders, Boymelgreen Capital owes Mizrahi-Tefahot NIS 650 million. It borrowed the money in 2006 to buy the 64% controlling interest in another real estate company, Azorim. At the end of April 2009 Azorim defaulted on a NIS 45 million payment to Series B1 bondholders; since then it has been negotiating its own debt arrangement with creditors.
Azorim, meanwhile, is working on reaching an arrangement of its own with its bondholders. However, the negotiations recently broke down after Boymelgreen increased his personal guarantee to Bank Mizrahi-Tefahot from $50 million to $75 million, without commensurately increasing his personal guarantee to bondholders.
